Stock Market Today: Stocks slide, 10-year yields top 5%, as war risks cloud markets

U.S. equity futures nudged lower Monday, while Treasury bond yields tested fresh multi-year highs in an extended selloff that could add another layer of volatility onto the busiest earnings week of the year on Wall Street.

Investors continue to track developments in Israel's war with Hamas, which launched its deadly attack from Gaza three weeks ago, as leaders around the region, and the wider world, work to contain the fighting and broker at least a form of cease-fire. 

Humanitarian aid is also making its way into Gaza, through the territory's border with Egypt, as officials continue to work for the release of more than 200 Israelis taken hostage by Hamas during the October 7 attack. 

Those diplomatic efforts eased some of the market's concern in overnight trading, but the lingering risk that regional adversaries such as Iran, or even Saudi Arabia, could be drawn into the conflict continues to blunt risk appetite.

Still, the U.S. dollar index, which tracks the greenback against a basket of six global currencies and acts as the safe-haven benchmark in times of market turmoil, slipped 0.05% in overnight trading 106.118, suggesting some modest moves into riskier assets. 

The Japanese yen, however, eased past the 150 mark in overnight dealing, a level that has some traders awaiting intervention from the Bank of Japan and which may have triggered small amounts of dollar sales and yen purchases. 

In the bond market, benchmark 10-year note yields breached the 5% mark in overnight trading, after briefly surpassing that level late last week for the first time since 2007, and were last seen trading at 5.008% ahead of $141 billion in 2-year, 5-year and 7-year note auctions later this week.

Global oil prices were largely flat, following two consecutive weekly gains that has take Brent crude, the global pricing benchmark, firmly past $90 a barrel amid supply disruption concerns tied to the middle east conflict.

Brent contracts for December delivery were last seen 2 cents lower on the session at $92.17 per barrel while WTI futures contract for the same month slipped 7 cents to $88.01 per barrel.

Market volatility gauges were also on the rise, with the CBOE Group's VIX index rising 3.2% in overnight trading to 22.08, a fresh seven-month high. That level suggests traders are expecting ranges on the S&P 500 of around 1.38%, or 58.3 points, over the next month. 

A busy earnings week also indicates the likelihood of elevated trading volatility, with 158 S&P 500 companies reporting third quarter earnings over the next five days, including mega cap tech names such as Google parent Alphabet  (GOOGL) - Get Free Report, Microsoft  (MSFT) - Get Free Report, retail and cloud computing giant Amazon  (AMZN) - Get Free Report and Facebook owner Meta Platforms  (META) - Get Free Report.

Heading into the start of the trading day on Wall Street, futures contracts tied to the S&P 500, which is down 8% from its early July peak, the highest of the year, are priced for a 14 point opening bell decline.

Futures linked to the Dow Jones Industrial Average, which slumped into negative territory for the year last week, are indicating a 120 point pullback while those tied to the Nasdaq, which fell 4.31% last week, are priced for a 60 point decline.

In overseas markets, Europe's Stoxx 600 was marked 0.45% lower in early Frankfurt trading, with markets largely tracking U.S. equity futures as well as the broader conflict in Israel. In Asia, a  slump in China stocks took the benchmark CSI 300 to a fresh 2019 low and pulled the region-wide MSCI ex-Japan 0.72% lower into the close of trading. 

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